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Cost Reduction

The people of Correll Concepts believe that packaging's greatest profit-building potential lies in the marketing, or sales-building, area. (See Creating a Sales-building A-bomb.) However, many pizza company executives view packaging's profit-boosting potential in terms of cost reduction. In fact these two pursuits aren't always mutually exclusive. With Correll Concepts' innovative box designs, it's often possible to achieve marketing and cost-reduction goals simultaneously.

Two Basic Cost-reduction Strategies. The biggest factor in a pizza carton's cost structure is material. In a corrugated folder-type pizza box, material comprises 70 percent to 80 percent of its total cost. In a clamshell-type box, it comprises around 50 percent of total cost. So, clearly, a large opportunity for cost reduction lies in reducing material cost. There are two basic strategies for reducing material cost: (1) use a lower-cost corrugated board and (2) use less board in manufacture of the box blank.

STRATEGY 1: To reduce the cost of the board you can do one or a combination of three things:

1. Switch to a fewer number of print colors — ex., if you're currently having your box printed with two colors, go to one color.

2. Switch to a lighter weight, or thickness, of paper for either of the liners (the outer papers) or for the medium (the inner fluted paper) used in making the board. However, be advised that this tends to reduce the board's strength, or rigidity.

3. Switch from white (bleached) paper to kraft (brown) paper on one or both of the liners.

STRATEGY 2: To reduce the amount of board used in manufacture of the box blank, you must switch from your current box structure to a new board-saving structure. There are two categories of structural changes: (1) minor tweaks to a current structure, and (2) adoption of a totally new structure. Minor tweaks generally produce a cost savings in the range of one percent to three percent. However, they often have the advantage of not “disrupting” store operations. For more savings than that, a totally different structure, or different box concept, is usually required. The patented innovations of Correll Concepts fall into both areas. We can provide cost-saving tweaks to your current box concept, or can provide a totally new box concept for maximum savings.

Either of strategies 1 and 2 can usually be used for achieving a substantial cost savings. For a double-whammy, use both together. However, the amount of savings to be achieved depends on the cost structure of your current carton. If you've already driven the cost to a minimum by employing the above cost-reduction strategies, then future carton changes will produce only small savings. However, if you're currently using the traditional square pizza box with the double-panel front wall or the Chicago folder-style carton, then substantial cost reductions are most likely possible.

In addition to material cost savings, another factor effecting box cost is speed of production. The more units that a manufacturer can produce per hour, the lower the cost per unit. This explains why clamshell cartons are so expensive. Clamshells require substantially more time to produce than do blanks for a folder carton. It's this slower rate of production that makes clamshell cartons so costly. In addition, box blanks for some types of folder cartons can be produced faster than others, resulting in a lower cost for the faster-produced blanks. (For insight into carton types and structures, see Structural Options — Pros & Cons.)

For clamshell-type cartons that are used for packaging side items such as breadsticks and the like, it's usually possible to effect a cost savings of 30 percent or more by replacing the clamshell carton with a comparable-sized folder style carton. For eye-opening examples, see Superior Side-item Packaging.

Lastly, production quantity amount also affects box cost. With a large quantity, a manufacturer can run its production line non-stop for a long period — resulting in max efficiency and lowest possible cost per unit. With smaller quantities, the manufacturer must frequently stop the line to change dies — resulting in “dead time” and higher cost per unit.

How Correll Concepts is able to provide a better box concept that carries a lower cost. Pizza company executives tend to assume that pizza cartons incorporating one or more of Correll Concepts' patented structures must cost more than their current box. That's usually not the case! In fact, oftentimes it results in a cost savings. How so? It's because most of Correll Concepts' patented structures produce their unique benefit along with a savings in material over the traditional pizza box. This material savings, in turn, provides a cost savings that results in an overall price savings over a pizza company's current carton.

In short, it's often possible for a pizza company to acquire the unique benefit of one or more of Correll Concepts' patented box features at no increase in cost! If you'd like to explore how this might be done, contact John Correll - 734-455-5830 or email john@correllconcepts.com. When considering cost reduction options, it's important to know that Correll Concepts is a packaging design specialist, not a box manufacturer. So we can work with any box manufacturer you choose. Or we can refer you to one.

Now that you've learned how to reduce packaging cost, see Creating a Sales-building A-bomb for how to increase sales and market share, as well.